Murphy featured in all three of Ireland's tour matches in New Zealand and Australia, coming on as a replacement against the All Blacks and Wallabies and captaining his country for the first time against New Zealand Maori.
Commenting on his new club deal, the Naas man said: "I've been at Leicester a long time and it shows how much Tigers is a part of my rugby life that I am extending my contract again.
"I count myself very fortunate to have played in so many great teams at Leicester and to be able to run out in front of our incredible supporters at Welford Road.
"As defending champions, we are obviously there to be shot at again, but we'll be looking forward to the challenge when we return for pre-season."
Murphy has won seven Guinness Premiership titles, two Heineken Cups and an Anglo-Welsh Cup, with his international honours including 68 Ireland caps and two Test appearances for the British & Irish Lions.
Leicester head coach Richard Cockerill said: "We're delighted that Geordan has agreed a new deal with the club. He is a world class player and he sets a superb example as a player, both on and off the field.
"He's our longest-serving player now and he's certainly been adopted by the supporters as one of their own.
"I don't think he's ever really contemplated playing anywhere else and he still has so much to offer the game as a whole and Leicester Tigers in particular."
Murphy, now 32, made his Tigers debut as a teenager back in November 1997 and has amassed 268 appearances for the club.
Leicester's Guinness Premiership final victory over Saracens last month was his 249th start for the club and he has scored 88 tries and 660 points as a Leicester player.